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With patent strikedown, Teva's new Copaxone formula loses two defenses against generics

Bad news for Teva, much-needed good news for the embattled Mylan: The U.S. Patent and Trademark office’s review board struck down two patents on Teva’s new long-acting multiple sclerosis med Copaxone.

The Israeli drugmaker developed Copaxone 40 mg as a follow-up to the drug’s original, shorter-acting formula, which had been a longtime top-seller. The older version went off patent in 2015, and Teva worked furiously ahead of time to switch as many patients as possible to the new formula.

Mylan challenged the patents through the PTO’s new inter partes review process, and the Patent Trial and Appeals Board handed down the decision late Wednesday.

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Though the PTAB’s decision doesn’t augur well for Copaxone 40 mg’s longevity as an exclusive brand, the drug won’t face generic rivals immediately. A third patent awaits a hearing by the same board, and a court fight over still another patent is scheduled to go to trial next month.

Ironically enough, the latest Copaxone threat would not be as worrisome had Teva failed at switching patients to the new version. After Novartis’ copy, Glatopa, launched last June, Teva’s Copaxone franchise clung to market share because 78% of U.S. scripts went to the 40 mg product, the company said in its Q4 earnings release.

The Copaxone products together brought in $4 billion for Teva last year, down from $4.24 billion in 2014. Analysts pegged 2016 sales at $3.29 billion.

That’s several billion dollars to be targeted by would-be generics makers Mylan, on the one hand, and Novartis and Momenta Pharmaceuticals on the other. Mylan says it’s one of the first companies to have filed for a generic approval, and Novartis and Momenta’s filing is also pending. Momenta, in fact, believes that its app has a greater chance of success; the two partners have the only FDA approval for the active ingredient in the original Copaxone version. Because of that leg up, the two partners “may be betterpositioned than others” to snag the green light, CEO Craig Wheeler said during the company’s fourth-quarter earnings call.

For its part, Mylan says it believes it’s eligible for the coveted 180-day exclusivity awarded to drugmakers that are first to file for a generic approval. That 6-month head start can deliver significant sales because prices usually don’t fall significantly until multiple generics hit. It would be a much-needed win for Mylan, which is under attack for its EpiPen pricing, and may be unable to rely on that strategy to keep that product growing.

The exclusive access can be shared, however, and the FDAaccepted the Novartis/Momenta team's application on the same day as Mylan's.

What happens next? The PTAB’s decision on the third patent is expected by Sept. 1, and the district court trial is scheduled for Sept. 26. Analysts see Wednesday’s strikedown as a bad sign for that third PTAB ruling, and some aren’t optimistic about the patent lawsuit, filed by Novartis and its Copaxone generic partner Momenta Pharmaceuticals.

“Teva is more likely to lose than win the court case,” Credit Suisse analyst Vamil Divan said in a Wednesday investor note.

But, he added, if Teva can eke out a win on any of the patent claims contested in that lawsuit, the company could file for an injunction that would keep generics from launching until the Federal Circuit Court of Appeals considered the case. That in itself would delay knockoffs till the first half of 2018.

And that’s just what Leerink Partners analyst Jason Gerberry predicts, should Novartis and Momenta prevail in court. After all, Teva took its patent fight over the original Copaxone version all the way to the U.S. Supreme Court, which declined to consider the case. “[W]e expect Teva to exhaust all legal appeals, assuming all its Copaxone IP is invalidated, which would keep generic challengers off the market until 2018,” Gerberry said in an investor note after the decision.

Bernstein’s Ronny Gal isn’t so sure. Though he’s expecting a challenge to that one Teva patent that so far remains unscathed, his bet is that Copaxone 40 mg will face copycat competition next year.

“We see the odds of generic entry on Copaxone in 2017 at ~80% after today,” Gal wrote Wednesday. “This would essentially force a much faster transition of the debate on the company to its remaining two businesses – generics and the innovative branded pipeline.”

True to predictions, Teva isn’t ready to concede, even if it loses in court. "We remain confident in the strength of our intellectual property,” CEO Erez Vigodman said in a Wednesday statement. “We are prepared to defend the full suite of our intellectual property through the PTAB and the U.S. courts regardless of the time required.”